Canada Retail Sales Ramp Up 1.5% in October on Auto Purchases

Canadian retail sales surged in October, climbing the most in nine months, as consumers flocked to car dealerships to purchase a new vehicle.

The value of retail sales in October rose 1.5% on a seasonally adjusted basis to 49.92 billion Canadian dollars ($38.87 billion), Statistics Canada said Thursday. Market expectations were for a more muted 0.3% gain, according to economists at Royal Bank of Canada. On a year-over-year basis, retail sales rose 6.7%.

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On a priced-adjusted, or volume, basis, retail sales climbed 1.4% in October from the previous month, and rose 5% from a year ago.

Write to Paul Vieira at paul.vieira@wsj.com

OTTAWA--Canadian retail sales surged in October, climbing the most in nine months, as consumers flocked to car dealerships to purchase a new vehicle.

The gains were broad based. The report suggests consumers aren't necessarily paring back spending plans after two rate rises earlier this year, and signs of further increases are in the offing.

The value of retail sales in October rose 1.5% on a seasonally adjusted basis to 49.92 billion Canadian dollars ($38.87 billion), Statistics Canada said Thursday. Market expectations were for a more muted 0.3% gain, according to economists at Royal Bank of Canada. On a year-over-year basis, retail sales rose 6.7%.

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A day earlier, Canadian data indicated wholesale transactions rose by a similar 1.5% in October, on strong volumes. Among other things, wholesalers connect the farmers or manufacturers that produce goods with retailers buying finished goods to sell to Canadian households.

On a priced-adjusted, or volume, basis, retail sales climbed 1.4% in October from the previous month, and rose 5% from a year ago.

The Bank of Canada has adopted a cautious approach to rate-policy making, following two rate rises in July and September. The caution stems from uncertainties in the economy -- among them how highly indebted households respond to higher borrowing costs. Canadian household debt hit a fresh high in the third quarter, and is among the highest on an adjusted basis in the developed world.

In October, consumers -- perhaps buoyed by strong labor-market gains -- were willing to open their wallets to purchase goods.

Also lifting retail sales in the month were a 1.1% rise, to C$10.11 billion, in purchases at food and beverage stores, due in part to a 3.7% gain at outlets selling alcohol. For sellers of beer, spirits and wine, it was the best month since May of last year.

General merchandise stores, which incorporate department stores, recorded their first increase in sales in three months, as receipts advanced 1.8% to C$5.79 billion.